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GM food and New Zealand consumers

What is the response of New Zealand consumers to genetically modified (GM) foods? Will they pay extra for genetically enhanced foods? Will they buy GM foods if they are cheaper than non-GM foods? A team from Lincoln University's Agribusiness and Economics Research Unit set out to explore this further.

What is genetic modification (GM)?

Genetic modification refers to the process of changing the genetic material of an organism using laboratory techniques. Genetic modification includes inserting new DNA into an organism, inactivating some of the existing DNA or changing the existing DNA in some way.

New DNA can be inserted into an organism using laboratory tools such as gene guns. This is a complex process involving careful research.

The first generation of commercial GM was done in plants and was either targeted at increasing herbicide tolerance (so that weed spraying could be more efficient leading to cheaper food production) or increasing insect resistance (so that less chemical sprays were used on the crop, reducing the farmers costs, creating cheaper food with less spray residue).

The second generation of GM food is creating desirable characteristics, such as better taste, increased nutritional value or longer shelf life.

What are some GM foods?

The four most commonly grown GM crops in the world are maize, corn, soy and canola. Go to Nature magazine's website to find out where these crops are being grown: www.nature.com/nature/focus/gm/map.html

Currently no genetically modified crops are intentionally grown in New Zealand for the market. Any research carried out using genetic modification of viable organisms in a research institution requires approval from the Environmental Protection Authority. This depends upon the GMO's being strictly contained in field tests or glasshouses and laboratories. The current field tests operating in New Zealand include one for GM onions.

The research

In order to investigate whether New Zealand consumers will buy genetically modified foods, 2000 randomly selected New Zealand households were sent a questionnaire about their willingness to buy GM foods and how much they would pay for them. 36 percent of the surveys were returned. Economic modelling using mathematical equations then turned these results into some useful predictions about the economic benefits of growing GM crops.

The foods in the survey

The examples of GM foods used in the survey were fictitious (made-up). The researchers created these examples to reflect near-future GM practice. Three of the foods offer health benefits, one leads to reduced use of pesticides, one makes the food cheaper to produce and one has no obvious benefit. They were:

Butter produced from cows genetically modified to produce 50 percent less cholesterol in their milk.

Milk from cows that are grown on pastures containing genetically modified clover.

Meat from sheep genetically modified for 'double-muscling', producing more meat and less fat per animal.

Apples genetically modified to produce twice as many antioxidants, which may help prevent cancer.

Bread made from genetically modified wheat that is 25 percent cheaper to grow.

Sweetcorn that had been genetically modified to resist insects so that it requires a 50 percent reduction in the usual application of pesticides.

Will New Zealanders buy GM food?

The results to the survey showed that 31.4 percent of respondents would not buy any of the GM foods referred to in the questionnaire. Some people would buy some but not all of the GM foods referred to. For most products, about half of respondents would pay as much or more for the enhanced GM food as for the basic non-GM food. The GM food that people most commonly indicated that they would buy was the antioxidant apples, followed by the low-cholesterol butter (i.e. foods with obvious health benefits).

The economics of growing GM crops

Economic modelling suggests that if current trends continue, New Zealand shoppers could only support an agricultural industry where less that one-quarter of the food produced is GM.

Economic modelling requires fancy maths where the data is graphed as the proportion of people willing to buy GM foods and the percentage of the non-GM price they would be willing to pay. Next, an equation which describes the shape of the graph is identified. Other factors affecting the results are considered, and each factor is then adjusted to see the overall effect that is has.

Advantages of growing GM food crops possibly include:

the potential to reduce production costs

the potential to increase yield

the potential to reduce environmental damage done by crop spraying

the potential to produce foods with extra benefits.

The first and last of these have obvious economic impacts: cheap food will presumably sell well increasing profits, food with extra benefits should be able to bring in a higher market price and also increase profits. However, this is only if the GM food production is supported by consumer demand. The potential to increase yield may have positive or negative economic impacts.

Economists used the data collected in this study to make recommendations about how much GM food production New Zealand's economy could support if GM technology was used on farms here. They calculated the outcomes for three possible scenarios:

If farms produce the same amount of produce and prices increase, farmers could expect a 6 percent increase in profits.

If farms produce more produce and prices stay the same, farmers could expect a 2 percent decrease in profits (because of a possible glut in the market).

If farms produce more produce and prices increase, farmers could expect a 4 percent increase in profits.

If public support for GM food stays the same the best situation for farmers would be if 15 percent of their crops were GM and they could charge 11 percent more for this product.

To find out more about the economic impacts of GM crops from a farmer's point of view.